Investing in sports a risky bet for colleges

Athletics cost colleges, their students - even taxpayers - millions. How long can they afford to stay in the game?

Sep. 15, 2013

ABOVE: University of Cincinnati head coach Tommy Tuberville leads his team onto the field for the game against Purdue University at Nippert Stadium on Aug. 31. The Enquirer/Joseph Fuqua II BELOW: Xavier University's Courtney Kobashigawa during the matchup with Miami at the XU Soccer Complex on Aug. 17. The Enquirer/Cara Owsley

ABOUT THE SERIES

The Enquirer this year is looking at the sustainability of a college system where tuition, student debt and costs all are increasing, leading to fears that higher education could be the nation's next economic bubble to burst. Today: Athletic programs add to already rising cost at most colleges. Monday: Small colleges use sports to lure students, gain tuition money.

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From Oxford to University Heights to Highland Heights to Evanston, college students are paying more than $500 per year to subsidize sports.

The University of Cincinnati and Miami University, for example, added $6 million and $1.2 million, respectively, this year to prop up their already heavily subsidized sports programs and keep up in the national arms race.

“There’s always a ripple effect. They say, ‘We’ve got to keep up to be competitive,’ ” said Brit Kirwan, chancellor of the University System of Maryland and co-chairman of the Knight Commission on Intercollegiate Athletics. “When we reach the breaking point, I don’t know.”

The Knight Commission says Division I schools with football spent $91,936 per athlete in 2010, seven times the spending per student of $13,628. Division I universities without football spent $39,201 per athlete, more than triple the average student spending.

Nearly every university loses money on sports. Even after private donations and ticket sales, they fill the gap by tapping students paying tuition or state taxpayers.

Athletics is among the biggest examples of the eruption in spending by universities that has experts concerned about whether higher education can sustain itself.

The lethal combination of exploding spending, tuition and student debt could lead to a wider financial crisis, reminiscent of the Internet bubble of the late 1990s or the housing bubble in the late 2000s.

In sports, the chasm between the haves and have-nots continues to expand, said Kirwan, the former president of Ohio State University.

“We’re probably headed for some sort of disruption where the schools with lesser access to extensive revenue will have to find a different model,” he said. “Those who have the revenue will find a separate structure, whether it’s inside the NCAA or not.”

Even those involved question all of the money spent on sports.

“At some point, we’re going to hit a wall where we have to think about how we’re spending those dollars,” said David Sayler, the new athletic director at Miami University. “It’s certainly cause for concern.”

'Arms race' costly for universities here

• UC froze tuition this year, but it will pay more than $80 million – much of it borrowed – to expand Nippert Stadium by 2015. Donors and those buying expensive tickets will pay the bill.

• Miami has cut hundreds of jobs during the last several years and taken $50 million out of its overall budget. But Sayler wants to raise $80 million from private donors. Half of the money would go for sports scholarships, with a new multi-sport practice facility also on the drawing board.

• Northern Kentucky University can’t afford a new Health Innovations Center to house nursing and other growing programs, but it can expand to Division I sports. Students and taxpayers pick up $8.5 million of the school’s $10 million athletic budget.

• Xavier University will collect $2.1 million more in television money this year, just by upgrading to the reconstituted Big East Conference.

Sports create identity, but are they worth the cost?

College sports undeniably have their benefit, creating university pride and an identity that no philosophy or classics program will ever match.

“I think it’s worth it,” said Drew Harmon of White Oak, a fifth-year finance and entrepreneurship major at UC, and chairman of a group that allocates the student fees.

UC students pay $168.02 per semester on their student fee specifically for athletics; the university pays about $15 million more in general funds.

“I’ve been here for five years, and the more athletics is succeeding, the more the UC community seems like a family,” Harmon said.

UC Athletic Director Whit Babcock says the $49 million UC spends on athletics is only about 4 percent of the total university budget.

“Athletics attracts about 400,000 people a year to campus,” he said. “I truly believe that 4 percent is a heck of an investment.”

Miami’s Sayler said the spending benefits students by providing scholarships to those who happen to be playing sports.

“What we’re predominantly subsidizing is the student, not the sport,” he said. “Those investments in them as students, and graduating them, that’s a story that’s not being told.”

But NCAA data show that only 16.2 percentof the spending at Division 1 schools with football, such as Miami, goes to student aid. The rest goes to salaries, game expenses and facilities.

Too much supply of sports for whole school to thrive?

Xavier University is the closest among area schools to finding a recipe that works financially, with no costly football program, a successful men’s basketball program that earns millions of dollars in profits a year, and dedicated private donors.

Greg Christopher, Xavier’s new athletic director, acknowledges that there’s too much supply of college sports for every program to thrive.

“Institutions use athletics as a lever to scratch and claw and fight for visibility,” he said.

The casualty in the arms race is spending on academics and student services.

“It’s very alarming to see how intercollegiate athletics is distorting expenditures and value in higher education,” the Knight Commission’s Kirwan said. “It has so much potential for good, but I think we’re on a trajectory now that in my opinion is doing more harm than good.”

Recession didn't stifle the appetite for sports spending

According to the NCAA, only 23 athletic programs at the highest level of college sports nationally break even financially. They are the same traditional powerhouses that can command big crowds, huge donations and long contracts with sponsors.

Every other university has plugged that hole with subsidies from general funds.

For those at the highest level of college football, the subsidies average 20 percent of total spending. But for schools that don’t play big-time football, subsidies average 71 percent of the total athletic budget.

Spending continues to increase, 10.8 percent from 2011 to 2012 for those playing Division I football and 8.8 percent for those without football.

“For most schools and for the NCAA as a whole, the recession does not seem to have been particularly detrimental,” the NCAA said in an April 2013 report.

The spending is driven by television contracts. UC, for example, collected less than $7 million a year in the old Big East Conference – and will collect less in its new league, the American Athletic Conference.

Were UC to succeed in its campaign to join the Atlantic Coast Conference, it would collect more than $20 million a year.

“The basic problem is that there’s too much money,” Kirwan said. “There seems to be an unlimited appetite with the public for big-time college sports, so the media interests are willing to spend lots of money. It puts other schools in the difficult position of trying to keep up when they don’t have the resources.”

He said stadiums and coaches’ salaries are the primary culprits.

“That’s where the money is going,” he said. “It really isn’t going to the student-athletes. In football, you now have strength coaches by position. When there’s a timeout at a basketball game, you have more people in business suits than those in uniforms.” ⬛